FAANG: Meta, Amazon, Apple, Netflix, Google
MANGO: Microsoft, Anthropic, Nvidia, Google DeepMind, OpenAI
Let’s assume that the FAANG/MANGO-led stock overvaluation bursts and the value of these stocks collapses. What systemic effects do you see in this scenario?
We can draw some lessons from history: during the IT bubble in September 2001, the Fed stepped in and cut interest rates by 5 percentage points. In the following years, this led to a bubble in the real economy, where house prices rose to unsustainable levels by 2008. There was also a bubble in the industrial and mineral sectors, which collapsed along with housing and the financial sector.
Compared to the 2001 crash, FAANG/MANGO companies are giants and likely have a much more systemic impact than the IT startups of the 2000s. A market crash would likely cause ripples beyond just the stock market. Would banks also fail in the turmoil? In other words, should we prepare for something more like the 2008 crash rather than the 2001 one?
Is history repeating itself, or what else could happen?